Correlation Between MACOM Technology and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Nabors Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MACOM Technology and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Nabors Industries, you can compare the effects of market volatilities on MACOM Technology and Nabors Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MACOM Technology with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Nabors Industries.
Diversification Opportunities for MACOM Technology and Nabors Industries
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MACOM and Nabors is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and MACOM Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MACOM Technology Solutions are associated (or correlated) with Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of MACOM Technology i.e., MACOM Technology and Nabors Industries go up and down completely randomly.
Pair Corralation between MACOM Technology and Nabors Industries
Given the investment horizon of 90 days MACOM Technology Solutions is expected to under-perform the Nabors Industries. But the stock apears to be less risky and, when comparing its historical volatility, MACOM Technology Solutions is 1.12 times less risky than Nabors Industries. The stock trades about -0.09 of its potential returns per unit of risk. The Nabors Industries is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 5,119 in Nabors Industries on December 27, 2024 and sell it today you would lose (691.00) from holding Nabors Industries or give up 13.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
MACOM Technology Solutions vs. Nabors Industries
Performance |
Timeline |
MACOM Technology Sol |
Nabors Industries |
MACOM Technology and Nabors Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MACOM Technology and Nabors Industries
The main advantage of trading using opposite MACOM Technology and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Nabors Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nabors Industries will offset losses from the drop in Nabors Industries' long position.MACOM Technology vs. Power Integrations | MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. Cirrus Logic | MACOM Technology vs. Amkor Technology |
Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |